A short-term move back into the upper half of the aforementioned range would bode well for a push to more important chart/Fibonacci resistance at 952.80/960.88.

With global stocks on the ropes and the Dow on the verge of officially being in a bear market, risk aversion is on the rise. We are seeing significant flows into safe-haven investments such as gold, the Japanese yen and the Swiss franc.

USD-CHF has retraced 50% of the rally from the record low set in Mar at .9636 to the May high at 1.0625. A short-term return to parity is anticipated. With the pair now trading well below the major moving averages, the dominant downtrend seems to be re-exerting itself amid an environment of broad-based dollar weakness. A convincing retreat below 1.0000 would put the low back in play.

The dollar remains comparatively underpinned against the yen, although this pair has retreated from the recent highs. The Japanese economic outlook continues to deteriorate and the BoJ target for the overnight call rate remains just 0.50%.

With the SNB's target for 3-month Libor significantly higher at 2.75%, the Swiss franc is just a better choice for a safe-haven currency play at this point.

The dollar index is threatening to retrace below 72.00. If support at 71.85/82 gives way, potential would be for an eventual challenge of the all-time low at 70.70.

With the greenback on the defensive, there is additional upside pressure on crude. Oil set a new record high near $144 a barrel on Monday and remains well bid today.

Heightened geopolitical tensions between Iran and both Israel and the US are keeping crude underpinned. An article in The New Yorker by Seymour Hersh contends that the US has already launched covert operations against Iran with the goal of destabilizing the religious leadership and gathering intelligence on their nuclear facilities.

Iran has threatened to close the Strait of Hormuz if they are attacked. Approximately 40% of global crude passes through this narrow passage between Iran and the Arabian Peninsula. It is likely that an attack launched by either Israel or the US would send oil prices soaring toward $200 per barrel.

The market is pricing in the perceived risk of such an attack, expecting that if it is to happen, it must occur while President Bush is still in office.

These growing geopolitical worries are also factoring into the nearly 10% rise in the price of gold over the past couple of weeks. If oil does move to $200, even if the gold/oil ratio remains at 6.5 that would equate to a gold price of $1,300.

Adding physical gold to your portfolio provides a convenient and liquid hedge against these concerns, as well as skyrocketing oil prices, a declining dollar, a weak economy and systemic risks to the global banking system.

Physical gold is also one of the only assets that is not simultaneously someone else's liability, offering non-correlated diversification against the traditional asset classes.

Gold Market Movers:

US ISM manufacturing index for June rebounded to 50.2, better than market expectations.

US construction spending for May -0.4%, above expectations, versus -0.1% in Apr.

Eurozone unemployment for May unch at 7.2% from upwardly revised Apr rate.

UK Nationwide house prices fell 0.9% in Jun. A -6.3% pace y/y.

UK manufacturing PMI for Jun tumbled to 45.8, weaker than market expectations, versus a revised figure of 49.5 in May.

German unemployment for Jun fell 38k. Rate at 7.8%.

Japan Tankan index for June fell to +5, better than the market was expecting, versus +11 in May. Lowest level since 2003.

ECB says has concluded gold sales of 30 tonnes; no plans for further sales

Renewed claims gold will hit $US1000 an ounce

Crude surges amid gloom on inflation outlook

Geopolitical worries send oil above $143

Merrill's Thain facing grave consequences